RBI Annual Policy Statement 2010-11

The RBI on Tuesday(20-04-10) hiked short-term lending and borrowing rates(Repo and Reverse repo Rates) and the portion of money banks deposit with it by 25 basis points each, in a move aimed at controlling the double digit inflation. The below list shows the present and increased key rates: Policy Rates/Reserve Ratios 1. Bank Rate 2. Repo Rate 3. Reverse Repo Rate 4. Cash Reserve Ratio 5. Statutory Liquid Ratio 25.0% d unchange 5.75% 6.00% rate Present 6.00% 5.00% 3.50% rates d Increased Unchange 5.25% 3.75%

Cash Reserve Ratio (CRR) is the amount of funds that the banks have to keep with the Reserve Bank of India. If RBI decides to increase the percent of this, the available amount with the banks comes down. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks. The hike in CRR, which will come into effect from April 24. As a result of the increase in the CRR, about Rs 12,500 crore of excess liquidity will be absorbed from the banking system. With the RBI deciding that banks now need to increase the amount of cash they have to keep with the central bank (the cash reserves), the problem is that banks will not earn any interest on this amount. So banks will be left with little option but to hike interest rates to make up for that loss of interest they would normally have earned had CRR been lower.

So Home loan, car loan and personal loans are likely to rise marginally that might burden for the common man. Why RBI was forced to hike rates? The RBI said that the Indian economy is firmly on the recovery path. Exports have been expanding since October 2009, a trend that is expected to continue. On balance, under the assumption of a normal monsoon and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand, for policy purposes the baseline projection of real GDP growth for 2010-11 is placed at 8.0 per cent with an upside bias.(Inputs from: Rediff) Assuring that the policy actions would not halt the recovery, the RBI pegged the FY'11 GDP growth at 8 per cent. It also pegged the wholesale inflation, which is currently hovering close to the doubledigits (9.9 per cent in March), at 5.5 per cent for FY' 11.
Banking and Finance terms in India - 2010 What is Open Market operations(OMO)?

The buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system by RBI. Open market operations are the principal tools of monetary policy. What is Micro Credit?

It is a term used to extend small loans to very poor people for selfemployment projects that generate income, allowing them to care for themselves and their families. What is Liquidity Adjustment Facility(LAF)?

A tool used in monetary policy that allows banks to borrow money through repurchase agreements. This arrangement allows banks to respond to liquidity pressures and is used by governments to assure basic stability in the financial markets. What is RTGS System?

The acronym 'RTGS' stands for Real Time Gross Settlement. RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a 'real time' and on 'gross' basis. This is the fastest possible money transfer system through the banking channel. Settlement in 'real time' means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. 'Gross settlement' means the transaction is settled on one to one basis without bunching with any other transaction.

What is Bancassurance?

It is the term used to describe the partnership or relationship between a bank and an insurance company whereby the insurance company uses the bank sales channel in order to sell insurance products. What is Wholesale Price Index(WPI)?

The Wholesale Price Index (WPI) is the index used to measure the changes in the average price level of goods traded in wholesale market. A total of 435 commodity prices make up the index. It is available on a weekly basis. It is generally taken as an indicator of the inflation rate in the Indian economy. The Indian Wholesale Price Index (WPI) was first published in 1902, and was used by policy makers until it was replaced by the Producer Price Index (PPI) in 1978. What is Consumer price Index(CPI)?

It is a measure estimating the average price of consumer goods and services purchased by households. What is Venture Capital?

Venture capital is money provided by an outside investor to finance a new, growing, or troubled business. The venture capitalist provides the funding knowing that theres a significant risk associated with the companys future profits and cash flow. Capital is invested in exchange for an equity stake in the business rather than given as a loan, and the investor hopes the investment will yield a better-than-average return.

What is a Treasury Bills?

Treasury Bills (T-Bills) are short term, Rupee denominated obligations issued by the Reserve Bank of India (RBI) on behalf of the Government of India. They are thus useful in managing short-term liquidity. At present, the Government of India issues three types of treasury bills through auctions, namely, 91-day, 182-day and 364-day. There are no treasury bills issued by State Governments. What is Banking Ombudsmen Scheme?

The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution of complaints relating to certain services rendered by banks. The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services. The Banking Ombudsman Scheme was first introduced in India in 1995, and was revised in 2002. The current scheme became operative from the 1 January 2006, and replaced and superseded the banking Ombudsman Scheme 2002. What is Subsidy?

A subsidy is a form of financial assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or to encourage it to hire more labor.

What is a Debenture? How many types of debentures are there? What are they? A debenture is basically an unsecured loan to a corporation. A type of debt instrument that is not secured by physical asset. Debentures are backed only by the general creditworthiness and reputation of the issuer. i)Convertible Debentures: Any type of debenture that can be converted into some other security or it can be converted into stock..

ii)Non-Convertibility Debentures(NCB): Non Convertible Debentures are those that cannot be converted into equity shares of the issuing company, as opposed to Convertible debentures. Non-convertible debentures normally earn a higher interest rate than convertible debentures do.

What is a hedge fund?

Hedge means to reduce financial risk. A hedge fund is an investment fund open to a limited range of investors and requires a very large initial minimum investment. It is important to note that hedging is actually the practice of attempting to reduce risk, but the goal of most hedge funds is to maximize return on investment. What is FCCB?

A Foreign Currency Convertible Bond (FCCB) is a type of convertible bond issued in a currency different than the issuers domestic currency. In other words, the money being raised by the issuing company is in the form of a foreign currency. A company may issue an FCCB if it intends to make a large investment in a country using that foreign currency. What is Capital Account Convertibility(CAC)?

It is the freedom to convert local financial assets into foreign financial assets and vice versa at market determined rates of exchange. This means that capital account convertibility allows anyone to freely move from local currency into foreign currency and back. The Reserve Bank of India has appointed a committee to set out the framework for fuller Capital Account Convertibility. Capital account convertibility is considered to be one of the major features of a developed economy. It helps attract foreign investment. capital account convertibility makes it easier for domestic companies to tap foreign markets. What is Current Account Convertibility?

It defines at one can import and export goods or receive or make payments for services rendered. However, investments and borrowings are restricted. What is Arbitrage?

The opportunity to buy an asset at a low price then immediately selling it on a different market for a higher price.

What is Capitalism?

Capitalism as an economy is based on a democratic political ideology and produces a free market economy, where businesses are privately owned and operated for profit; in capitalism, all of the capital investments and decisions about production, distribution, and the prices of goods, services, and labor, are determined in the free market and affected by the forces of supply and demand. What is Socialism?

Socialism as an economy is based on a collectivist type of political ideology and involves the running of businesses to benefit the common good of a vast majority of people rather than of a small upper class segment of society.

SOME MORE BANKING TERMS CERTIFICATE OF DEPOSITS This scheme was introduced in July 1989, to enable the banking system to mobilise bulk deposits from the market, which they can have at competitive rates of interest. The major features are: Who can issue Scheduled commercial banks (except RRBs) and All India Financial Institutions within their `Umbrella limit. CRR/SLR Applicable on the issue price in case of banks Investors Individuals (other than minors), corporations, companies, trusts, funds, associations etc Maturity Min: 7 days Max : 12 Months (in case of FIs minimum 1 year and

maximum 3 years). Amount Min: Rs.1 lac, beyond which in multiple of Rs.1 lac Intt. rate Market related. Fixed or floating Loan Against collateral of CD not permitted Premature cancellation Not allowed Transfer Endorsement & delivery. Any time Nature Usance Promissory note. Can be issued in Dematerialisation form only only wef June 30, 2002 Other conditions If payment day is holiday, to be paid on next preceding business day Issued at a discount to face value Duplicate can be issued after giving a public notice & obtaining indemnity

CORE BANKING SOLUTIONS Core Banking Solutions (CBS) or Centralised Banking Solutions is the process which is completed in a centralized environment i.e. under which the information relating to the customers account (i.e. financial dealings, profession, income, family members etc.) is stored in the Central Server of the bank (that is available to all the networked branches) instead of the branch server. Depending upon the size and needs of a bank, it could be for the all the operations or for limited operations. This task is carried through an advance software by making use of the services provided by specialized agencies. Due to its benefits, a no. of banks in India in recent years have taken steps to implement the CBS with a view to build relationship with the customer based on the information captured and offering to the customer, the customised financial products according to their need. Advantages: The CBS process is advantageous both to the customers and the banks in thefollowing manner: Customer: Transaction of business from any branch, ATM that offers him anytime anywhere banking facility. Lower incidence of errors. Hence accuracy in transactions. Better funds management due to immediate availability of funds. Banks: Standardisation of process within the bank. Better customer service leading to retention of customer and increased customer traffic. Availability of accurate data & Better use of available infrastructure Better MIS and reporting to external agencies such as Govt., RBI etc. Increased business volume with better asset liability management and risk management.

DERIVATIVES A derivative is a financial contract that derives its value from another financial product/commodity (say spot rate) called underlying (that may be a stock, stock index, a foreign currency, a commodity). Forward contract in foreign exchange transaction, is a simple form of a derivative. Objectives and instruments of derivates: The major purpose that is served by derivatives is to hedge the risk. Futures, forwards, options, swaps etc. are the common instruments of derivatives. The derivatives do not have any independent existent and are based on the underlying assets that could be a stock index, a foreign currency, a commodity or an individual stocks. Operators in the derivative market : There are various kinds of operators in the derivative market such as hedgers (which manage the risk), the speculators (who undertake risk for realization of profit) and the arbitrageurs (who make purchase and sales simultaneously but in different market to take benefit of price differentials). The players in option market include development finance institutions, mutual funds, institutional investors, brokers, retail investors. Components: The derivatives have components such as Options, Futuresforwards and Swaps. Option It is contract that provides a right but does not impose any obligation to buy or sell a financial instrument, say a share or security. It can be exercised by the owner. Options offer the buyers, profits from favourable movement of prices say of shares or foreign exchange. Variants of option: There are two variants of options i.e. European (where the holder can exercise his right on the expiry date) and American (where the holder can exercise the right, anytime between purchase date and the expiry date). It is important to note that option can be exercised by the owner (the buyer, who has the right to buy or sell), who has limited liability but possibility of realization of profits from favourable movement in the rates. Option writers on the other hand have high risk and they cover their risk through counter buying. Components of options: Options have two components i.e. call option and put option. The owners liability is restricted to the premium he is to pay. Call option : The owner i.e. the buyer, has the right to purchase and the seller has to obligation to sell, a specified no. of instruments say shares at a specified price during the time prior to expiry date. Put option : Owner or the buyer has the right to sell and the seller has the obligation to buyduring a particular period. Futures and forwards The futures are the contracts between sellers and buyers under which the sellers (termed short) have to deliver, a pre-fixed quantity, at a pre-fixed

time in future, at a pre-fixed price, to the buyers (known as long). It is a legally binding obligation between two parties to give/take delivery at a certain point of time in future. The main features of a futures contract are that these are traded in organised exchanges, regulated by institutions such as SEBI, they need only margin payment on a daily basis. The future positions can be closed easily. Futures contract are made primarily for hedging, speculation, price determination and allocation of resources. The forward on the other hand is a contract that is traded off-the-stock exchange, is self regulatory and has certain flexibility unlike future which are traded at stock exchange only, do not have flexibility of quantity and quality of commodity to be delivered and these are regulated by SEBI, RBI or other agencies. Futures and options. Futures can also be distinguished from options because in futures, both the parties have to perform the contract and no premium is required to be paid by either party, where as in case of option, only the writer has to perform while the buyers makes payment of the premium to the seller in consideration for his performance. In addition, in futures the contract is to be performed on the settlement date and not before that whereas in case of option the buyer can exercise the option any time prior to the expiry date. Credit derivatives. Credit derivatives are over the counter financial contracts (i.e. off-balance sheet) through which the transferor can transfer the credit risk to another party without actually selling the asset. It can be defined as a contract on the basis of which one party has to make payment to another party on the basis of performance of a specified underlying credit assets. In a credit derivative there are two parties i.e. protection seller and protection buyer. Protection seller assumes the credit risk in consideration of premium that the protection buyer pays. Protection buyer on the other hand transfer the risk to the protection seller for a premium. Under the arrangement, the protection seller makes the payment to the protection buyer on credit event (such as failure to pay, insolvency, bankruptcy, repudiation, price decline etc. of the underlying asset) taking place. CUSTOMER RELATIONSHIP MANAGEMENT Customer satisfaction is the degree of happiness a customer realises with a product or serviceand is the most important driving force for retention of an

existing customer which in turn results in growth of any business organisation including banks, since it determines the size of cash flows into the business. The satisfied customers always help in improving the toplines (i.e. business turnover) through referrals and positive publicity which lead to improvement in bottomlines. In order to maintain their position, while the business organisations have to retain their existing customers, but for better growth in future, fresh customers are also required to be added. New vis--vis old customer It needs to be borne in mind that to attract new customers involves huge cost in terms of set up costs, promotion costs, advertising cost, follow up cost etc. Due to these costs the operating cost for new customer is generally higher for new customers. As a result, the longer relationship of a customer brings better returns to the business. The defection by customers is a major factor for loss of revenue to the business and it should be appreciated that higher the rate of defection causing lower average length of relationship, higher would be the rate of reduction in profits. Emergence of CRM Hence, every deregulated market has to veer around to retaining existing customers besides identifying and attracting new customers. In US decreasing interest in traditional marketing was witnessed as early as 1980s when returns dipped to 3%, companies had to look for an alternative to mass marketing through ads and promos. This led to a finer segmentation of the market. The technological innovation like data warehouses and call centres allowed a micro approach i.e. a segment called customer relationship management or CRM and eCRM. With the size, location or past history not being that relevant which it used to be in the past and the market forces being in favour of the customer, the organisations caring for customers are likely to be the winners. The availability of information technology tools are arousing additional expectations of the customer which these organisation can think of ignoring. Customer Relationship Management (CRM) refers to the ability to understand, anticipate and manage the needs of the customer, interaction and relationship resulting in increased profitability through revenue and margin growth and operational efficiencies. eCRM can address other factors like personalisation, customization, one to many and many to many transactions. It permit business speed, agility and real time response to customers or markets through the new tools such as eMail, internet telephony, chat facility etc. It reduces the cost of customer contract.

BANKING VISION 2010 An IBAs Committee prepared a vision report in the backdrop of globalisation of Indian economy,developments taking place in and around the globe and those that are expected as per theprojections made in the Planning Commissions India Vision Document 2020 & 10th Five Year Plan, the ongoing reforms measures, expected Basel II needs and the expected pace of expansion in the balance sheets of banks. Focus of banking: The focus of banking has to move in favour of cost control as that would be the key factor to higher profits in future. The cost will have to be determined as revenue minus profit which would necessitate efficient use of resources including manpower resources with proper reconfiguration of human minds, as the increase in productivity would determine the winners and laggards. Financial services system could see the emergence of highly varied financial products, tailored to meet specific needs of the customers in the retail as well as corporate segments. The advent of new technologies could see the emergence of new financial players doing financial intermediation (such as utility service providers offering bill payment services or supermarkets or retailers doing basic lending operations). Specialisation : Some players might emerge as specialists in mortgage products, credit cards etc. whereas some could choose to concentrate on particular segments of business system, while outsourcing all other functions. Some other banks may concentrate on SME segments or high net worth individuals by providing specially tailored services beyond traditional banking offerings to satisfy the needs of customers they understand better than a more generalist competitor. Growth with quality : The future growth of banking business has to focus on the qualitative aspects rather than quantitative only. Total assets of the Scheduled Commercial Banks by March 2010 would be at Rs.40,90,000 cr. Bank assets are expected to increase at annual compounded rate of 13.4% till March 2010 compared with 16.7% increase during 1995-2003 period. Deposits are expected to grow from Rs.1356000 cr to Rs.3500000 cr i.e. 14.5% CAGR and investments with a CAGR of 23.6%. Need for consolidation: Consolidation of banking institutions is expected through mergers and acquisitions, globalisation of their operations, development of new technology and universalisation of banking. There would be greater presence of international players in the Indian financial system. Some of the leading Indian banks, may emerge as global players since there are opportunities available to Indian banks abroad to

expand their business. The market led mergers between private banks and also between public sector banks, are not ruled out This could see the emergence of 4-5 world class Indian Banks. Risk and reward : For success of banking transactions, the ability of the banking institutions to perceive risk and take suitable steps to manage the risk, will have to be ensured. The risk managers could prosper and the risk takers are likely to survive. The risk management has to be given substantial attention and this has to be initiated at the branch level instead of corporate offices. Information technology: Faster decision making and faster appraisal are likely to be in place with faster information and data flow. This could help banks to improve their credit management effectively in addition to reduction in transaction cost and improved revenues.

What is Retail Banking? Banking services for individual customers. Retail banking refers to banking in which banking institutions execute transactions directly with consumers. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so forth. What is Private Banking? Banking services offered to high net-worth individuals. Private banking institution assists the high net-worth individual in investing his/her money in exchange for commissions and fees. The term "private" refers to the customer service being rendered on a more personal basis. What is an Investment Bank and Commercial Bank and what is the difference between them? Investment Bank: A financial institution that deals primarily with raising capital, corporate mergers and acquisitions, and securities trades. It aids companies in acquiring funds. Commercial Bank: An institution which accepts deposits, makes business loans, and offers related services. Commercial banks also allow for a variety of deposit accounts, such as checking, savings, and time deposit. These institutions are run to make a profit and owned by a group of individuals.

A Commercial bank is commonly referred to as simply a bank. The term Commercial is used to distinguish it from an investment bank. The term Commercial is used to refer to any banking organization or division that deals with the deposits and loans of business organizations. Traditionally, banks either engaged in commercial banking or investment banking. In commercial banking, the institution collects deposits from clients and gives direct loans to businesses and individuals. Through investment banking, an institution generates funds in two different ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company. Examples of Investment Banks: Bank of America, J P Morgan Chase, Citigroup. What is Private Equity? Private equity is money invested in companies that are not publicly traded on a stock exchange. Instead, they normally seek equity stakes (that is partial ownership) in private companies. Venture capital is a specialized subcategory of private equity. Both are high risk, high reward investment approaches. What is Globalization? Globalization is a process of interaction and integration among the people, companies, and governments of different nations. Advantages of Globalization: i)It can reduce Poverty, ii) It promotes world peace. iii)It is allowing access to technology in developing countries and etc. What is Privatization? Privatization can also be called denationalization or disinvestment. Privatization refers to of ownership from the government(public sector) to the private business sector either partially or totally.

What is Liberalization? The process of reducing or removing restrictions on international trade. This may include the reduction or removal of tariffs, abolition or enlargement of import quotas, abolition of multiple exchange rates, and removal of requirements for administrative permits for imports or allocations. What is Marketization? It is an economic system based on the principles of the market, including supply, demand, choice and competition. What is Micro Finance? Microfinance offers poor people access to basic financial services such as loans, savings, money transfer services and micro insurance. People living in poverty, like everyone else, need a diverse range of financial services to run their businesses, build assets, smooth consumption, and manage risks. What is Free Market economy? A market economy based on supply and demand with little or no government control is said to be free market economy. What is Stock Market/ Share market? A market where securities are bought and sold. Its basic function is to enable public companies, governments and local authorities to raise capital by selling securities to investors. What is Equity? Ownership interest in a corporation in the form of stock. What is Stock? The capital raised by a corporation through the issue of shares entitling holders to an ownership interest (equity). What is National Electronic Fund Transfer system (NEFT)? What is the difference between RTGS and NEFT? National Electronic Fund Transfer (NEFT) is an online system for transferring funds of Indian financial institution (especially banks). This

facility is used mainly to transfer funds below Rs. 1,00,000. The Reserve Bank of India has instructed banks that they should not use RTGS for amounts below Rs 1 lakh. The key difference between RTGS and NEFT is that while RTGS is on gross settlement basis, NEFT is on net settlement basis. The minimum transaction value for RTGS is Rs. 1,00,000, whereas there is no minimum value for NEFT. What is DICGC? Deposit Insurance is nothing but the protection of deposit amount invested in banks under the Act of Deposit Insurance and Credit Guarantee Corporation (DICGC). If a bank fails then a limited amount of protection is provided by the government to depositors. All commercial banks, cooperative banks are covered under the Deposit Insurance in India. What is IRDA? To protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto. Headquartered in Hyderabad. Hari Narayan is the chairman of IRDA. What is Balance of Payments? A balance of payments is a strategy used to analyze the relationship between money that is flowing into a country and money that is going out of that same country. The BOP is divided into three main categories: the current account, the capital account and the financial account. What is Balance of Trade? The difference between a country's imports and its exports. What is Global Warming? Global warming refers to an average increase in the Earth's temperature, which in turn causes changes in climate. It happens when greenhouse gases (carbon dioxide, water vapor, nitrous oxide, sulphur hexafluoride and methane) trap heat and light from the sun in the earths atmosphere, which increases the temperature. What is Kyoto Protocol?

It is an international agreement aimed at controlling the greenhouse emissions, mainly Carbon Dioxide. What is Savings Account? A savings account typically refers to an account in which one places money to earn a small amount of interest. What is Debit Card? A debit card is a plastic card issued by banks to customers. The card allows instant purchase, removing the correct balance from the users attached bank account. What is Credit Card? A card issued by a financial company giving the holder an option to borrow funds, usually at point of sale

About SBI: State Bank of India(SBI) is the largest bank in India. The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921. The Government of India nationalized the Imperial Bank of India in 1955. The State Bank Group having more than 17000 branches. SBI alone holds 12,448 branches. SBI has over 21,000 ATMs. The bank has 141 overseas offices spread over 32 countries. Symbol and Logo:

Symbol is the Key Hole, whose meaning is "Welcome to SBI". Slogans are:

1) The Nation banks on us 2) Pure banking nothing else 3) The Banker to every Indian 4) With you all the way. State Bank of India has the following six Associate Banks (ABs): 1. State Bank of Bikaner and Jaipur (SBBJ) 2. State Bank of Hyderabad (SBH) 3. State Bank of Indore (SBIr) 4. State Bank of Mysore (SBM) 5. State Bank of Patiala (SBP) 6. State Bank of Travancore (SBT) The six ABs have a combined network of 4502 branches in India which are fully computerized and 2410 ATMs. 12. How can you find the fake currency note? H: Dont know.

Ways to detect a fake note

Optical Variable Ink: The colour of the numeral 1000 appears green when the banknote is held flat but would change to blue when the banknote is held at an angle. The font size is also reduced. Latent Image: When the note is head horizontally, the vertical band on the right shows an image of the number 1000. Security Thread: The note also has a three millimeter wide security thread with the inscriptions: one thousand, the word 'Bharat' in Hindi and RBI. Micro lettering: The 'RBI' and the numeral, "1000" - which can be viewed with the help of a magnifying glass - are between the Mahatma Gandhi portrait and the vertical band.

Watermark: When the note is held against the light, the picture of Gandhi and an electrolyte mark showing the number 1000 appear in the white space. 1. Why do you want to enter banking? Banking is one of the fastest growing sectors in India with more stable and high growth and more over providing wide range of career opportunities for graduates. So I want to take an opportunity to join in a bank. 2. Have you applied to any other areas apart from banking? No. 3. What is the difference between Cheque and Demand Draft? Both are used for transfer the amount b/w two accounts of same or different Bank. Cheque is written by an individual and withdrawn from the account whereas Demand draft is issued by a bank where you have to pay before issuing. 4. What are NBFCs and difference between NBFCs and Bank? Non-bank financial companies (NBFCs) are financial institutions that provide banking services, but do not hold a banking license. NBFCs do offer all sorts of banking services, such as loans and credit facilities, retirement planning, money markets, underwriting, and merger activities. These institutions are not allowed to take deposits from the public. 5. What is Free Market economy? A market economy based on supply and demand with little or no government control is said to be free market economy. 6. What are the functions of Nabard? National Bank for Agriculture and Rural Development(NABARD) is one of the premiere agency to provide credit in rural areas. It provides credit flow for the development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts. 7. Is there any specialized company for home finance in India? National Housing Bank(NHB) 8. Do you think that you are over qualified for this position?

No, I dont think so, but I am very well qualified for this position. 9. 2 years down the line if you would be offered 50k or 70k by other organization, Will you leave this organizations? If not why? 10. What is National Electronic Fund Transfer system (NEFT)? What is the difference between RTGS and NEFT? National Electronic Fund Transfer (NEFT) is an online system for transferring funds of Indian financial institution (especially banks). This facility is used mainly to transfer funds below Rs. 1,00,000. The Reserve Bank of India has instructed banks that they should not use RTGS for amounts below Rs 1 lakh. The key difference between RTGS and NEFT is that while RTGS is on gross settlement basis, NEFT is on net settlement basis. The minimum transaction value for RTGS is Rs. 1,00,000, whereas there is no minimum value for NEFT. 11. What is Private Banking? Banking services offered to high net-worth individuals. Private banking institution assists the high net-worth individual in investing his/her money in exchange for commissions and fees. The term "private" refers to the customer service being rendered on a more personal basis. 12. What is an Investment Bank and Commercial Bank and what is the difference between them? Investment Bank: A financial institution that deals primarily with raising capital, corporate mergers and acquisitions, and securities trades. It aids companies in acquiring funds. Commercial Bank: An institution which accepts deposits, makes business loans, and offers related services. Commercial banks also allow for a variety of deposit accounts, such as checking, savings, and time deposit. These institutions are run to make a profit and owned by a group of individuals. A Commercial bank is commonly referred to as simply a bank. The term Commercial is used to distinguish it from an investment bank. The term Commercial is used to refer to any banking organization or division that deals with the deposits and loans of business organizations. Traditionally, banks either engaged in commercial banking or investment banking. In commercial banking, the institution collects deposits from clients and gives direct loans to businesses and individuals.

Through investment banking, an institution generates funds in two different ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company. Examples of Investment Banks: Bank of America, J P Morgan Chase, Citigroup.